Article

The Changing Budget Outlook: Causes and Implications

Gene B. Sperling, Peter R. Orszag, and William G. Gale

In this report, the authors trace the extent, causes, and implications of the recent rapid decline in short- and medium-term budget prospects. In May 2001, the Congressional Budget Office’s baseline budget projected surpluses of $5.6 billion in the unified budget and $3.1 trillion outside of social security for fiscal years 2002 to 2011. By October 2001, each of those figures had fallen by about $3 trillion. Since fiscal 2002 did not begin until October 1, 2001 the figures imply that almost all of the non-social-security surplus for the coming decade was used up before the decade even began.

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